[lug] Letting folks pay from the web.

[Nate Duehr]

On 2/2/2010 3:01 PM, Bear Giles wrote:
>
>
> On Tue, Feb 2, 2010 at 2:38 PM, Nate Duehr <nate at natetech.com 
> <mailto:nate at natetech.com>> wrote:
>
>
>     I've noticed businesses seem to have gotten lax about checking
>     signature
>     on the back, via a photo ID again lately anyway.  I think my card has
>     been checked about 1 time out of 10 for the last 20 times I've
>     used it.
>
>
> Economics, same reason why it's now common to be have the signature 
> waived entirely on small purchases of $25-50.  It's cheaper to eat the 
> occasional loss on "card present" purchases than it is to verify or 
> even require a signature.  You don't see that much in a gas station 
> but something like Target might need an extra cashier to keep the 
> lines from getting too long.

Oh I agree, it's all about econmics.  (Virtually everything is.)

The card companies placed themselves in a position where they were awash 
in bad leverage they extended to people who shouldn't have had it... 
then they had a brilliant idea...

"Our real money comes from transaction fees, and what we're selling is 
CONVENIENCE now."  Thus VISA's commercial where the guy brings a 
smoothly running coffee shop to a halt by paying in cash... yeah, right.

You'll need more than a few minutes, but check out the 2008 statistics 
sometime...

http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php

Highlights :

- The average outstanding credit card debt for households that have a 
credit card was $10,679 at the end of 2008. One year earlier, that 
average was $10,637. (Source: Nilson Report, April 2009)

That number should be zero, or if they're counting those of us who roll 
payments through the cards to get perks, and DO NOT PAY INTEREST on the 
balance... it'd probably average out somewhere around $500 - $1000.

- As of March 2009, U.S. revolving consumer debt, made up almost 
entirely of credit card debt, was about $950 Billion. In the fourth 
quarter of 2008, 13.9 percent of consumer disposable income went to 
service this debt. (Source: U.S. Congress' Joint Economic Committee, 
"Vicious Cycle: How Unfair Credit Card Company Practices Are Squeezing 
Consumers and Undermining the Recovery," May 2009)

I get a kick out of that title they referenced for that last one... 
"Unfair Credit Card Company Practices".  That's a politically-charged 
statement.  There's an easy way to avoid such practices... don't run a 
balance!  (Duh.)

But check out the most telling number in there.  13.9% of ALL CONSUMER 
DISPOSABLE INCOME is servicing debt.  Seriously? Are these people paying 
that kind of interest just a LITTLE BIT FRAKKIN' SLOW?  No wonder they 
think the world's out to get them... they dug the a small hole and then 
to get out, tried to keep digging until the hole was taller than they are.

Of course, this is why "consumers" aren't outraged at the government 
tossing another Trillion or two on the bonfire trying to "kick start" 
the economy.  They're so far in debt up to their eyeballs, they no 
longer know what "cash and carry" means.  And they think the government 
can fix that.

Thus...

- "As household wealth has declined in the downturn, more American 
families are facing financial distress due to high debt burdens. In 
2007, before the recession began, 14.7 percent of U.S. families had debt 
exceeding 40 percent of their income." (Source: U.S. Congress' Joint 
Economic Committee, "Vicious Cycle: How Unfair Credit Card Company 
Practices Are Squeezing Consumers and Undermining the Recovery," May 2009)

That title of that report still cracks me up, it's not Credit Card 
companies "undermining the recovery"... it's people who over-spent.  If 
you're up to 40% of your income in debt, here's a hint: STOP SPENDING.  LOL!

Sigh... I get all riled up about consumer debt... sorry.  I hate even 
calling someone buying something on debt a "consumer".  They're just a 
borrower.  Renting stuff like clothes and electronic gadgets -- is a 
really unwise fiscal idea.

But that's essentially what people are doing.  These numbers are way too 
big to claim these are all folks who are whipping out the card for a bag 
of groceries during tough times... a large majority of us have had 
days/months/years like that from time to time.  These numbers here tell 
the tale -- it takes durable goods purchases to get this big.  People 
are financing iPods... seriously?

Our mental images of what we WANT vs. what we NEED, combined with what 
we THINK WE DESERVE are just way, way, way out of whack... and the 
"stuff" we buy is generally junk and loses value.

"Price is what you pay, Value is what you get."

- At the end of 2008, Americans' credit card debt reached $972.73 
billion, up 1.12% from 2007. That number includes both general purpose 
credit cards and private label credit cards that aren't owned by a bank. 
(Source: Nilson Report, April 2009)

We really need a cultural change that makes carrying this much debt 
distasteful to a point where you'll give your neighbors crap for doing 
it.  I volunteer to start the trend. :-)

So yeah... some really BIG economics drives the whole credit card 
"security theater".  Too much money passes through them not to give 
lip-service to "security" but in the end, they're selling 
ease-of-purchase at the point-of-sale.  And ease-of-purchase, collides 
with good security practices.

Nate
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